Does it Hurt Your Credit to Have Multiple Savings Accounts Open?

Credit ratings can seem mysterious and arbitrary; many people wonder what factors contributed to the three-digit number that plays such an important role in financial determinations. Yet credit ratings are anything but arbitrary; they're carefully calculated figures based on a number of factors in your financial history. If you're applying for a home loan, auto loan or new apartment, it's worth taking a look at your credit to see where there's room for improvement. Having multiple savings accounts open rarely hurts your credit, but it's possible that they're affecting credit in other ways.

Credit Role

Lenders, landlords and potential employers take a look at your credit to evaluate the financial risk they're taking on in doing business with you. High credit scores indicate that consumers have low income-to-debt ratios, make more than the required minimum payment on credit card balances or loans, or have long, positive relationships with creditors. Low credit scores may indicate that consumers have missed payments, high debt loads compared with income, or have balances that have been turned over to collections. Good credit often translates to preferred interest rates on loans and higher balance limits.

Account Significance

Checking and savings accounts can help consumers with little credit begin to establish credit history, demonstrating a basic understanding of the fundamentals in personal finance to landlords and potential employers. Checking accounts with a positive balance show that you've mastered the concept of cash flow, spending no more than what's available and using checks or online banking to pay bills. Savings accounts demonstrate that you're taking the future into consideration by putting away money to meet financial goals or obligations.

Account Effect

While holding open checking and savings accounts with positive balances helps show financial stability to individuals running a background check, they don't necessarily help or hurt your credit. Checking accounts can sometimes run the risk of hurting credit because consumers who spend more than their available balance may be turned over to collections for bounced checks or overdraft protection mini-loans from the bank that aren't repaid within a specific time frame. Additionally, banks may run credit checks on new customers seeking a checking account to determine the risk of offering that overdraft protection. Multiple credit checks can wind up hurting credit over time since it may appear as if a consumer is scrambling to amass credit availability. If savings accounts aren't linked to debit cards or personal checks, it would be less likely that banks would run a credit check on potential customers.

Debt

While it won't directly hurt your credit to have multiple savings accounts open, taking a look at your big-picture finances can help address this topic more deeply. If you have thousands of dollars socked away in multiple savings accounts, but also have thousands of dollars in credit card debt rapidly accumulating interest, the latter could potentially hurt your credit. Depending on your situation, it may help your credit to use some of those savings to pay down credit card debt, lowering your overall debt-to-income ratio and perhaps helping your credit.